Chap 16

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Questions and Answers

What is required for a merchant's firm offer to be deemed valid?

A willingness to negotiate further terms.

An acceptance without any conditions.

An oral agreement must be established.

A signed writing assuring the offer will remain open. (correct)

How can an offer to buy goods be accepted under the UCC?

Only through a verbal acknowledgment.

Only through a signed written agreement.

By payment of an advance deposit.

Through a prompt promise to ship or shipment of goods. (correct)

What distinguishes conforming goods from nonconforming goods?

Nonconforming goods are always less expensive than conforming goods.

Conforming goods are delivered on time, while nonconforming goods are late.

Conforming goods require a written agreement, whereas nonconforming goods do not.

Conforming goods meet the contract's terms, while nonconforming goods do not. (correct)

What is the common law treatment of consideration in contract modifications as opposed to the UCC's treatment?

Common law requires new consideration, while UCC does not. Signup and view all the answers

In what situation must a modification of a sales or lease contract be in writing to be enforceable under UCC?

If it's an agreement to modify without consideration. Signup and view all the answers

Which of the following best describes the term 'additional terms' in the context of contract discussions between merchants?

They may be stricken if one party is a nonmerchant. Signup and view all the answers

What is the primary purpose of the Statute of Frauds in contract law?

To provide a written record for certain types of contracts. Signup and view all the answers

Which of the following is NOT a characteristic of a firm offer made by a merchant?

It can be revoked at any time. Signup and view all the answers

What is a characteristic of a destination contract?

The seller must deliver the goods to a specific destination. Signup and view all the answers

Under the UCC, when does risk of loss pass with title?

It does not necessarily pass with title. Signup and view all the answers

What does a bailment imply in terms of property delivery?

Temporary delivery without passage of title. Signup and view all the answers

When does risk of loss transition to the buyer if the seller breaches the contract?

When the seller corrects the defects. Signup and view all the answers

Which of the following is true regarding shipment contracts?

Title passes to the buyer once the seller ships the goods. Signup and view all the answers

What occurs when a buyer accepts goods that have defects?

Risk of loss passes to the buyer. Signup and view all the answers

In which situation would the risk of loss not pass to the buyer?

If the buyer does not accept the goods. Signup and view all the answers

What happens to the seller's liability for goods in a destination contract?

The seller retains liability until the goods are delivered at the destination. Signup and view all the answers

When does the UCC apply if a contract involves both goods and services?

When the goods constitute the main part of the contract. Signup and view all the answers

What happens if an acceptance to a sales contract includes additional or different terms?

The acceptance is considered a counteroffer. Signup and view all the answers

In a shipment contract, when does the risk of loss pass to the buyer?

When the goods are placed in the hands of the carrier. Signup and view all the answers

Which law governs contracts for the international sale of goods?

United Nations Convention on Contracts for the International Sale of Goods. Signup and view all the answers

What is the main purpose of Articles 2 and 2A of the UCC?

To set the framework for sales and lease contracts. Signup and view all the answers

If a sales contract is silent on the issue of risk of loss, what is the default rule under the UCC?

Risk of loss remains with the seller until the buyer takes possession. Signup and view all the answers

Which of the following statements about risk of loss is true?

It can be affected by the type of contract (shipment vs. destination). Signup and view all the answers

What must occur for a contract to be enforceable under the UCC?

There must be a reasonable certainty of terms. Signup and view all the answers

What is required for an irrevocable offer in the context of option contracts?

Consideration is required. Signup and view all the answers

Which of the following is not an exception to the statute of frauds regarding the sale of goods?

Quantitative restrictions Signup and view all the answers

When is writing required under the statute of frauds?

For sales of goods priced at $500 or more. Signup and view all the answers

What describes 'Usage of Trade'?

A practice that is regularly observed in a specific trade. Signup and view all the answers

Which of the following is a category of rules of construction according to the content?

Course of performance Signup and view all the answers

How can merchants satisfy the writing requirement for sales contracts priced at $500 or more?

By a confirmatory memorandum. Signup and view all the answers

In determining the meaning of an agreement, what does 'Course of Performance' refer to?

Past conduct indicating agreement interpretation. Signup and view all the answers

What is a necessary component for a merchant’s firm offer to be considered irrevocable?

The offer must be made in writing. Signup and view all the answers

What must be demonstrated for parties to show their intention to form a contract?

There must be a clear agreement on material terms. Signup and view all the answers

Which of the following is an exception to the Statute of Frauds?

Goods specially manufactured for a particular buyer. Signup and view all the answers

What must be true for partial performance to be recognized in contract enforcement?

One party must admit the contract was made. Signup and view all the answers

How do acceptance rules differ between contract law and sales law?

Acceptance in sales law can introduce additional terms without negating the agreement. Signup and view all the answers

What is typically required for modification of a contract?

Modification requires no consideration in sales law. Signup and view all the answers

When is a contract not enforceable according to the material terms?

If a quantity term is undefined or unclear. Signup and view all the answers

Under what condition does the mirror image rule apply?

When acceptance occurs without any modifications. Signup and view all the answers

What distinguishes a sales contract from a general contract?

Sales contracts allow for open terms if the intent to form a contract exists. Signup and view all the answers

Study Notes

Sales and Lease Contracts

Covers the application of UCC (Uniform Commercial Code) to contracts involving both goods and services.
Acceptance of a sales contract may introduce additional or different terms, resulting in a counteroffer unless acceptance is conditional on those terms.

Risk of Loss

In shipment contracts, the seller is liable for goods lost or damaged during transport until delivery.
In destination contracts, the seller retains liability until goods are delivered to the specified location.
Under UCC, risk of loss does not automatically transfer with title; it is determined by the contract terms.

Passage of Title

Title passage depends on whether the seller has to deliver a document of title, like a bill of lading, to the buyer.
Delivery without movement includes bailment, where goods are temporarily delivered without transferring ownership.

Breach of Contract and Risk of Loss

Risk of loss shifts to the buyer when defects are cured or accepted, even if defects exist.
If the buyer breaches, they may still incur risk of loss depending on the circumstances.

Acceptance and Consideration

UCC allows acceptance of an offer through a promise to ship goods or the actual shipment of goods, even if they are nonconforming.
Modification of sales or lease contracts does not require additional consideration under UCC.
Written agreements may be needed to modify contracts without consideration.

Statute of Frauds

Required writing must indicate intent to form a contract and be signed by the party against whom enforcement is sought.
Special exceptions exist for specially manufactured goods, admissions, and partial performance.

Comparison: Contract Law vs. Sales Law

Sales law accommodates open terms; contract law requires all material terms to be outlined.
Under sales law, acceptance can occur even with additional terms unless expressly conditional.
The statute of frauds for sales law requires a written contract for goods priced at $500 or more.

Parol Evidence Rule

Prior dealings and trade practices help clarify contract terms.
Consideration of express terms, course of performance, course of dealing, and usage of trade are essential for understanding contract implications.

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Test your knowledge on the key concepts from 'Business Law Today, Standard Edition' by Roger LeRoy Miller. This quiz covers important topics and summarized cases from the 12th edition of the textbook. Challenge yourself and see how well you understand business law!